…switched for another platform, such as Symbian, if Nokia were to make the purchase, in order to avoid having to invest in two different operating systems.
But that could do more harm than good, say analysts. Palm's software may well be the key to the latest round of alleged interest from a handful of potential suitors. The company made itself far more attractive when last year it spent $44m to buy back the naming rights to the Palm OS from Access, the company that purchased PalmSource in 2005.
"I don't see a logical reason why any potential buyer would purchase Palm and then do away with the Palm OS. To me, that's where a lot of the value is," said Tavis McCourt, equity analyst with Morgan Keenan. The operating system has long been the reason that Palm loyalists are so enamoured of the products. And that's despite the demonstrated ability of handset makers such as Motorola, Samsung and HTC to rapidly churn out slimmer, cheaper, and more fashionable smartphones. The successful Motorola Q, Samsung BlackJack and T-Mobile Dash each boast thinner form factors and price tags significantly below the $399 Treo 750.
For that reason, between Nokia and Motorola, the latter's hardware know-how might pair better with Palm's software expertise. And it would follow a similar model in the smartphone industry in which handset makers see the benefit of having control over both the phone and the operating system, like RIM, McCourt said.
It's clear Palm needs to do something — and fast. Executives there may have realised how important the cool factor is for gadget buyers: The New York Times reported the company recently hired a former designer from Apple, ostensibly to gussy up its hardware.
There's always time to innovate, but for Palm, the quicker the better, said McCourt of Morgan Keegan. Hitting big with a product such as RIM's BlackBerry Pearl or LG's Chocolate, could instantly change the company's future prospects. "They've got to get better at design and be more aggressive at listening to what the market wants, rather than trying to dictate to the market what it should want."
Palm also isn't saying much about technology being developed by one of its founders, Jeff Hawkins, lauded as the "third arm" of the company's business. Hawkins is staying mum about it for now, but recently said in an interview that Palm fans should "keep a close eye" on Walt Mossberg's D-Conference to be held in May, at which Hawkins will be a featured speaker.
While still working at Palm, Hawkins founded another company, Numenta, which is working on designing an operating system that works like the human brain. For that reason, some have guessed the mysterious new Palm product could involve artificial intelligence. An ultramobile PC has also been floated as an idea.
Either way, said Kort, "You have to think if someone does buy Palm, more than half the reason has to be because they think that product is going to be a hit for the company."
